Justice Department Sues To Block Alleged Sham-trust Tax Scam
Said To Have Cost Treasury An Estimated $31 Million

WASHINGTON, D.C. – The Justice Department announced today that it has sued two
Las Vegas-based promoters of an alleged sham-trust tax scheme that the complaint
alleges has caused an estimated $31 million in losses to the federal treasury.
The suit alleges that Reinhold Sommerstedt and Daniel Young of Las Vegas sold
sham-trust packages to customers for as much as $14,500 and helped their
customers hide their income from the IRS in Caribbean bank accounts. The
defendants’ customers allegedly used phony loans and gifts to repatriate their
money while concealing their income from the IRS.

Also named in the suit are Lynn Lakers, a Boulder City, Nevada tax-return
preparer who allegedly prepared false tax returns for the phony trusts used in
the scheme, and Stephen Nestor of Boise, Idaho, a former IRS revenue officer
who allegedly signed tax returns on behalf of the bogus trusts.

“The Department of Justice is firmly committed to shutting down fraudulent trust
schemes that cost the treasury and law-abiding taxpayers millions of dollars
each year,” said Eileen J. O’Connor, Assistant Attorney General for the Justice
Department’s Tax Division.

Offshore transactions and trust misuse are two of the IRS’s Dirty Dozen tax
scams for 2006, which are listed at
http://www.irs.gov/newsroom/article/0,,id=154293,00.html.

More information about the Justice Department’s efforts against tax-scam
promoters can be found at http://www.usdoj.gov/tax/taxpress2006.htm.
Information about the Justice Department’s Tax Division can be found at
http://www.usdoj.gov/index.html.